Sam Bowman

Today is the first day of 'Living Wage week'. This is a
promotional week run by the Living Wage Foundation to promote its campaign to
get firms to pay their workers no less than £7.20 per hour (£8.30 in London) –
what it says is the lowest wage needed to live decently in Britain*.

Especially at times like this, low pay is an important
issue: people at the bottom of the earnings ladder are most vulnerable to rises
in the cost of living, and the amount of money earned compared with the
benefits rate plays a role in determining how likely people on long-term
benefits are to look for work.

To coincide with this, we at the Adam Smith Institute have
released a new paper (PDF) that reviews some of the Living Wage debate and proposes a
way to leave more money in the hands of low- and middle-income earners.
We applaud the motivations and methods of the Living Wage Foundation: instead
of lobbying the government for a hike in the National Minimum Wage (NMW) rate,
the Foundation has worked directly with private firms to persuade them to pay
their workers more. The power of good PR can be an enormously effective tool in
effecting social change. Unfortunately, some people will inevitably think that
the NWM needs to be raised to reach the Living Wage rate. This is the policy
that our paper aims to argue against.

The Government has made laudable efforts to cut spending and reform the education and welfare systems, but so far it has failed to cut the business regulation needed to revitalise the private sector. Employment is growing, but slowly. Small and medium-sized enterprises (SMEs), which make up 99% of all businesses and account for 59% of employment, are struggling under costs imposed by regulation and tax.

Today the Adam Smith Institute publishes a policy paper, Unburdening Enterprise, which identifies nine steps the Government should take to reduce costs for businesses, particularly the cost of hiring new workers. We hope that these steps, implemented as urgently as possible, will revitalise the private sector and restore business confidence.

60% of SMEs surveyed last year by the British Chambers of Commerce (BCC) said that they would like to take on more employees, but cannot afford to do so. A 2010 survey by the Federation of Small Businesses (FSB) of its members found that 44% of small businesses would take on more employees if the Government cut employers’ National Insurance contributions.

Though debate rages over the quantity of immigration into Britain, less attention has been paid to the quality of migrants. A new report released by the Adam Smith Institute today, Taxing Talent: How Britain Can Attract and Retain the World’s Best Workers (pdf), assesses the challenges facing the UK’s migration policy over the coming years and argues that lower income taxes are critical to improving Britain’s appeal to highly-skilled migrants.

Positive net migration is a necessity, both in the short-term and the long-term. In the short term, the economy is dependent on a flexible labour force if a strong recovery is to be possible. In the long-term, positive net migration is even more important. Britain’s ageing population and pensions system that depends on current tax revenues instead of personal savings means that, in order to maintain pensions at trend levels, a net level of at least 270,000 immigrants will be needed every year until 2050.

News International isn’t a monopoly, and it never has been. As Tim’s post this week showed, the BBC dominates broadcast and online news, and News International’s newspaper holdings can at best be seen as a strong stake in a competitive (if declining) market. Concerns about News International are valid, but as long as the BBC exists in its current form, some kind of News International-like firm is likely to be the only viable competition. The BBC is the root cause of Britain’s media malaise and it needs radical reform.

The phone hacking crimes are unforgivable, and if News International executives were aware of them they should be held to account. And the cosy relationship between it and successive British governments – of all stripes – is worrying. The press should be at odds with government, not in bed with it.

But News International’s size and influence is a direct consequence of its even larger rival. The BBC’s enormous market share in television, radio and on the internet has crowded out smaller competitors who are trampled under the BBC’s feet. Only another media behemoth could profitably compete with the BBC. Creating one state-sanctioned media colossus has meant that only other giants can compete.